How to Stop Non-Judicial Foreclosure

You may stop a nonjudicial foreclosure by taking it to the courts.

In several states, home foreclosure can proceed without a court ever becoming involved. This is known as nonjudicial foreclosure. The lender will use its rights under the "power of sale" clauses in a deed of trust, which is signed along with the original loan documents. There are some tried and trusted methods for stopping a foreclosure that goes before a judge. Stopping a nonjudicial foreclosure is also possible, but you have to go about it in a different way.

Instructions

1. Read your state's laws on foreclosure (see Resources) and pay particular attention to the actions that the lender must take to successfully complete a foreclosure.

2. Examine your loan documents carefully to establish exactly what you agreed to when you signed them, and what rights the lender has with regard to selling the property should you default.

3. Write down the exact steps your lender has taken in initiating the foreclosure, including any notices sent to you or posted publicly regarding your property. You are attempting to discover any deviation from either state law or the clauses in your loan documents that may enable you to argue in court that the foreclosure has been improperly initiated.

4. File a lawsuit against the bank that's foreclosing on your property. This is known as an action to enjoin the trustee's sale. While it is possible to file this yourself, and you are allowed to represent yourself in court, it is advisable to have a lawyer do it for you. They will ensure that paperwork is properly completed and that you have reasonable grounds for your suit. A lawyer will be familiar with local laws that could be used to your advantage, and will be able to point out any breaks in procedure that may give you a stronger case against the lender. If you can't afford an attorney, try contacting a local housing charity, which may take cases on a pro-bono basis.

5. Request as part of the lawsuit that the lender produce proof that it possesses the original loan documents with your signature. This is the "produce the note" strategy that has been successfully used in many judicial foreclosure states. If the lender cannot file the correct paperwork with the court, the judge may delay or even overturn the foreclosure.

6. Request that the court grant a temporary restraining order. This usually lasts a few weeks, until the court establishes whether you have a case to proceed.

7. File a lis pendens against your property. This is a legal notice that a suit is pending on the property. While this may seem like an odd step, it ensures that the entire process is under the jurisdiction of the courts, and it complicates the procedure for the lender considerably. It also alerts potential buyers of your property that there is a lawsuit pending. This means the bank will be unlikely to receive any bids for your house if it should proceed to an auction before the lawsuit is resolved. You can have the lis pendens expunged if you are successful in overturning the foreclosure.

References

• Foreclosure Fish: Non-Judicial Foreclosure
• Consumer Warning Network: How to use "Produce the Note" in Non-Judicial Foreclosure States

Resources

• RealtyTrac: Avoid Foreclosure: Know Your State's Foreclosure Law